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3-15-2010 @ 5:19PM
Yeah, opportunity cost is a very basic economic concept. But then again, how many kids still in high school (or younger) play this game? How many of them actually understand what economics are?
3-15-2010 @ 5:27PM
For that matter, how many people who are out of high school actually understand basic economic principles? I'm betting the answer is not very many.
3-15-2010 @ 5:41PM
How many of them actually care, if they play like me they just want to clear there bags and make a fast few G's then they will undercut everyone regardless. I don't really need gold in this game, as i am mostly a PvPer i rarely repair and most other things i can buy from honor, other than those few enchants each season
3-15-2010 @ 5:57PM
The worst is when people don't understand that price wars are bad for the sellers for "high level" recipes. The easiest to see are the engineering ammo since he price to create to so small, but the recipe is hard ish to get. There are about 4-5 people on my server that sell Iceblade arrows on my server and the price is just lowering and lowering....It sucks. Raiders need these arrows, they buy 5-7 stacks at a time. Huge demand! Bah, I may just try to control the market for a few days in order to bump up the cost. Or just send a letter saying "hey bro lets be friends! It isn't illegal in WoW to collude prices"
3-15-2010 @ 6:04PM
@tim- in the case of the new arrows I'm actually a fan of the low cost because, frankly, they don't take a lot of mats and you could still make a mint selling them for cheap prices. AND as a hunter I like being able to buy pretty cheap ammo now that I don't have a friendly engineer who makes things if I provide the mats.
3-15-2010 @ 6:06PM
@Tim:Your strategy doesn't work because smart traders would rather be the one who's selling 100% of the arrow purchases on their server/faction for 2g per stack than 25% of the arrow purchases for 6g per stack. Collusion simply means that you're dividing up your potential market share because you're too chicken to handle actual competition.
3-15-2010 @ 6:56PM
Without brand equity or varying product quality, premium pricing is impossible for all but a handful of items. And, obviously, competitive pricing challenges vendors who want to make as much profit as possible (who wouldn't, but for reality?) or whose cost structures are sloppy. Nobody's happy when costs that are mostly beyond our control make an item unprofitable, but when that occurs, it's time to find another market.
3-15-2010 @ 7:13PM
Braundo, you're failing to see the sky high demand for the engineering ammo. Since most ammo sells if it's not above the average market price, selling 100% of your ammo for 6g isn't that far fetched, if only the market stays stable around that price... When the price of the ammo goes down to 2g people don't want to spend more than that, even though if the price would have stayed at 6g they would have spent it without a second thought.Sure there may be flaws in my argument, but your argument is that bulletproof either...
3-15-2010 @ 9:03PM
"Without brand equity or varying product quality, premium pricing is impossible for all but a handful of items."THIS.THIS THIS THIS THIS THIS.There is ZERO PURPOSE to undercutting someone by more than a single copper. You are selling the exact same item. Nothing differentiates your product from anyone else's. In the real world, quality differentials can explain dramatically lower prices, but in the WOW economy, undercutting someone by 15% on teh same item is like having two Gap stores across the street from each other, one selling a shirt for $50 and the other selling the exact same brand of shirt for $32.50. It just doesn't make sense. the only distinguishing factor on the auction house is whose name comes first, and that is accomplished with one copper as well as it is with 100 gold. You're only hurting yourself.
3-15-2010 @ 10:10PM
But, where does "we will not be undersold" enter the game? Theoretical example: three people are selling Grimoire of the Frostbitten Kingdom (whatever). Buyout prices are as follows: 200G, 180G, 175G. Item is considered a niche market, appealing specifically to lv. 79 twinks. However, the prices currently listed are seen as excessive in all three situations, the auctions run out and the sellers lose their deposit, then have to relist the item yet again. Knowing that, I auction my own Grimoire of the Frostbitten Kingdom at 150G for buyout, and it finds a buyer right away due to 150G being the maximum price that potential buyers deem acceptable at that point in time. And then there's the factor of relisting high-level items being a drain on your pocket, do you slash prices to sell the bloody thing faster, or do you stick to your guns and maintain the original price? In any case, potential savings of larger sums of gold will attract people faster, which might not have been guaranteed if I'd have auctioned the item for 174G, 50S, 50C. :/
3-16-2010 @ 3:19PM
About collusion and oligopoly:During BC, there were about five tailors on my server making netherweave bags in bulk on the AH. They netted me about 3 or 4 gold per bag and about ten a day nearly always sold in one posting. The gold paid for my repairs in PvP and over the course of a few months, my spellfire set (I kind of miss having it take weeks to get an item upgrade, but then again, I don't...). I bought the cloth off the AH instead of farming it (although I would also incidentally get a bunch of cloth because I was grinding Scryer rep), so my cash profits were easy to calculate. I would not buy cloth over a certain price because I knew that I would not profit from it (unless there were no bags posted at all and I could price a little higher that day).Well, one day I got undercut by a single player, so I undercut him. And he undercut me. And so on. It got to where I was making a little less than 1 g per bag. So what I did was I put him in my friends list and waited until we were both on. I whispered him with something like, "hey, we are in a price war, it's getting crazy." He immediately recognized my name and wrote back, "yeah..." I asked him if he wanted to fix prices and trade days on the AH and he went for it. It only lasted about two or three weeks or so, but we ended up keeping prices higher for a while. We agreed that if a person posted lower than us, we'd both flood the market for a day with low-profit sales, or if they were low enough, we'd buy all the bags on the AH. Overall, it was interesting because I think we probably ended up not making much more money on the higher sales, but it was certainly fun to have our little two man "cartel."
3-18-2010 @ 3:51PM
@JafariI did something similar to this during Vanilla WoW. I had an Herb/Alch and someone in my guild would routinely help me out by farming up herbs and sending them to me. I noticed that the prices on the highest health pot at the time were a little low, and I had a massive supply of herbs. I asked the guy sending me herbs to only farm the herbs for that pot.I then had a huge supply of the health pot mats and would post health pots at a higher price. I'd also bid on everyone else's auctions so that they would cost more than mine. If I won the auction, I'd have more supply, if I lost, then someone reinforced the higher price. This was when average prices calculated by auctioneer-like add-ons were followed religiously. For about a month and a half or so I completely monopolized the Superior health pot market. I started moving down into the Major health pot market and inflating those prices as well as the price of herbs for the potions, since I had a massive supply from bidding up other auctions. I was making on average about 2 gold a day, although that would spike to a 40 gold minimum during the weekend and Thurs/Fri as the raiders came on. This was back when the max level was 60 though, and a lot of people were still saving up the 90g for their mount well up to level 50. The best part was there was no heavy lifting. Sure there were better ways to make gold, but all I had to do was collect cash from the mail, collect herbs/pots from the mail, possibly make some pots, and then post them. After a while a bunch of people banded together and starting flooding the market with cheap potions. It wasn't feasible for me to buy them all, and everyone else would just snap them up. They were selling for close to, or less than, the cost of the phials to make them. So I just let all my auctions expire, banked my pots, waited for the market to crash - which it did, rather spectacularly, and then started posting again while the price was up and still climbing.
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